[May 20, 2013] Ocado shares soar on Morrisons deal Tweet May 18, 2013 (Daily Mail - McClatchy-Tribune Information Services via COMTEX) -- MORRISONS has finally settled on a plan to catapult its sales online, agreeing a 25-year deal with Ocado that saw the internet grocer's shares soar 36pc. Britain's fourth largest supermarket had been holding exploratory talks with the upmarket grocer, which already has a supply deal with Waitrose, since March. Morrisons had been seeking a "turbo-charged" way to make its debut online and catch up with rivals who have been selling groceries over the internet for years. The deal will see Ocado rent out its high-tech warehouse and state-of the art delivery systems to Morrisons for an initial pounds sterling 126m, sending shares in the online grocer to an all-time high of 274.1p, up 72.2p. Ocado chairman Sir Stuart Rose piled in, buying pounds sterling 1m shares in his firm. Ocado will help Morrisons develop its own website, which will run independently to Ocado's own offering. All the products sold will be from Morrisons and the vans and staff will be exclusively dedicated to the supermarket to avoid breaching the existing Waitrose contract which precludes Ocado.com from selling products from third parties. Ocado will effectively be offering a white label service for Morrisons which will have no overt Ocado branding. The technology and services arrangement will see Morrisons buying Ocado's new Dordon distribution centre for pounds sterling 170m and leasing it back to the online grocer. A further pounds sterling 46m will be invested to expand the Warwickshire site in order to accommodate Morrisons' range. It will pay pounds sterling 30m to licence Ocado technology, an annual payment of 1pc of revenue to cover IT costs, 50pc fixed costs, and a 4pc management fee linked to operating costs. Morrisons will also contribute up to pounds sterling 8m in research and development costs as well as offering an incentive scheme paying 25pc of operating profit, rising to 50pc if profit increases above 6.6pc. Morrisons has been slow into the convenience and online business because of inherited legacy issues from the troubled merger with rival Safeway. Chief executive Dalton Philips said: "From a standing start Morrisons will be competing in the fast-growing online channel by the end of this year with a really compelling proposition." Ocado also told the Mail that it has held talks to roll out services in Asia and Europe which could transform the company into the next big Silicon Valley-style technology stock. The retailer is currently in talks to licence its know-how around the world. ___ (c)2013 Daily Mail (London, ) Visit the Daily Mail (London, ) at www.dailymail.co.uk/home/index.html Distributed by MCT Information Services [ Back To TMCnet.com's Homepage ]